The Reality of Expiring Electric Rate Caps in PA

2. 800.238.6753www.utilitech.com Presentation For The HRS/TND SEMINAR The Reality of Expiring Electric Rate Caps in PA

3. Dedicated to Producing Tangible Savings for Our Clients Who is UtiliTech? • Founded in 1991 - Private Company, Headquartered in SE PA • Our primary mission is to produce tangible cost management and savings for our clients by employing systematic review, analysis & energy procurement strategies in deregulated states What does UtiliTech do? • Energy Procurement, Supply & Management Services • Bill Audit Services – Gas, Electric, and Telecom • Unbiased & Independent Analysis • Utilize proprietary database of rates and tariffs to find savings • Implement and validate anticipated savings with suppliers • Manufacturing tax Audits • Energy, Telecom, and IT Management Consulting UtiliTech is your Advocate!

4. Delivering Results For A Diverse And Esteemed Client Roster Just a few of our many satisfied clients… Healthcare Financial Services Education Manufacturing Government Retail

5. Customer Impact Electricity Deregulated in PA in 1996 • Generation, Distribution, Transition, Transmission, etc. broken out • Generation is only portion open to competition • Bill explodes from 1 page to 4 or more • Pilot Program begins • After Pilot Program

6. Customer Impact Electricity Deregulated in PA in 1996 • Rate caps for generation costs established • Expiration dates set by PUC • Allegheny = 12/31/2010 (700,000) • Duquesne = 03/1/2002 (600,000) • Met-Ed (FE) = 12/31/2010 (500,000) • PECO = 12/31/2010 (1,500,000) • Penelec = 12/31/2010 (600,000) • PPL = 12/31/2009 (1,400,000)

7. Customer Impact Impact of PPL Rate Caps Expiring • Generation Rate Caps Expire December 31, 2009 • Will result in total bill cost increases for the majority of customers • Increase will vary by rate class and rate structure • Residential • from approx. 34% to 78% • Small Commercial/Industrial (GS1, GS3, GH1, GH2) • from approx. -2% to 125% • Large Commercial/Industrial (LP4, LP5, LP6) • from approx. 32% to 96%

8. Customer Impact Why Rates Will Change • Customers will see REAL cost of generation • Individual impacts will vary by customer • Revised tariffs will have large effect on some rates • Eliminating the demand portion of the generation charge • Declining block energy of the generation charge will terminate • Eliminating Time of Day; demand charges will be based on the highest kW during all hours in the bill period in Distribution and Transmission. • Eliminating EDI/IDI credits

9. Electric Market Pricing History Market Pricing

10. Likely Concerns of PPL Customers What are the specific concerns today? • Electric cost containment and management due to de-regulation and volatile market costs • Alternate supplier options • Relationship between alternate suppliers and local utility companies • Knowledge and understanding of multiple pricing options • Budget certainty • Fear, Uncertainty and Doubt about current and future energy markets!

11. Customer Options What Can You Do??? • Nothing – wait for PPL to establish new tariff rates • Purchase generation from deregulated supplier • Month-To-Month • One year agreement • Two year agreement • Three year agreement • Full Load • Partial Load

12. Customer Options What Can You Do??? Review ALL Energy Conservation Projects • Lighting Retrofits • New Technology for Equipment Replacement • Automation and Control Systems • Motion Detectors • Solar Panels

13. Procurement Process What Needs To Be Done Phase 1 - Procurement • Evaluate and define energy usage and demand data from energy bills. • Evaluate current contracts with existing energy suppliers. • Develop goals for energy cost and risk management. • Request proposals from qualified energy suppliers. • Evaluate proposals. • Negotiate contract pricing and terms with selected supplier(s). • Manage contract execution.

14. Procurement Process What Needs To Be Done Phase 2 – Bill and Contract Management • Examine and analyze bills compared to the contracts on an as needed, on-going basis during the term of this Agreement. • Monitor energy consumption patterns for significant changes. • Review supplier price performance compared to utility price-to-compare or other appropriate benchmark. • Monitor contracts relative to expiration and proactively engage the suppliers to ensure continued optimal results.

15. Consultant or do it yourself? Why Work with a Consultant for Electric Procurement? You have a business to run Pricing competition     Knowing the utilities and commodity markets Market timing Contract review Follow up process after contract implementation Several billing options from consultant

16. Q & A QUESTIONS AND ANSWERS

17. Proven Results To date UtiliTech has: • Performed energy procurement, utility, and telecom audit • Provided services for more than 2,500 clients across the US since 1991 • In 2008, UtiliTech managed over $325,000,000 in energy procurement costs • Our audits have identified over $80,000,000 in refunds and savings opportunities • Energy procurement and audit services are provided at no cost to the customer!

18. Mastery of the Energy Markets A Team With Extensive Experience • More than 80 years of energy industry knowledge on staff • 40 plus years of experience in energy deregulation and procurement • Full-time energy market price monitoring and analysis • Understanding tariffs & regulatory implications • Extensive experience with energy supplier contract language and pricing options • Extensive experience with all types of business, non-profits, government agencies and education institutions • Proven ability to deliver bottom line results!